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Oil traders cash in on US$2 surge

Nigerian men wait to fill jerry cans with diesel as another fuel shortage grips the city of Lagos, Nigeria, on Friday. Nigeria is the world's sixth-largest producer of crude oil, yet fuel and diesel shortages are common. PHOTO: EPA

Oil prices dipped slightly on Friday, as traders took profits following the prior day's surge of nearly US$2 per barrel.

Light, sweet crude for May delivery slipped US$0.22 to settle at US$63.63 per barrel on the New York Mercantile Exchange. Brent crude for May delivery rose US$0.25 to US$68.97 on the ICE Futures exchange in London.

Citigroup Global Markets energy analyst Tim Evans also said some small restarts upcoming at US refineries should aid gasoline supplies, which plunged last week amid strong demand.

Problems at US refineries had helped to stoke prices the prior day, when crude jumped US$1.84 per barrel.

Total US gasoline stockpiles sank by 5.5 million barrels last week to 199.7 million barrels, the US Energy Information Administration reported on Wednesday. Analysts had expected a 1.3 million barrel decline, according to a survey by Dow Jones Newswires.

"There is just no room for unscheduled downtime here," Cameron Hanover's Peter Beutel wrote in a research note. "The US is deeply dependent upon every, single refining unit on our soil -- and on a number of refineries abroad."

Gasoline futures slipped 1.21 cents to US$2.1797 per gallon on the NYMEX.

At the pump, a gallon of unleaded costs an average of US$2.819 per gallon (3.79 liters) across the US, according to AAA and Oil Price Information Service.

That was up from US$2.545 a month ago and US$2.717 a year ago.

On Thursday, also helping to boost crude prices was the International Energy Agency saying output by OPEC had slid to its lowest level in more than two years on production outages and self-imposed cuts.

Geopolitics also remained a factor, shoring up sentiment after oil and gas-rich Algeria was rocked by bomb attacks on Thursday, fueling worries about the oil producer's control over an Islamic insurgency.

"What is there about this environment that could possibly produce a conclusion that prices are coming down?" Fimat USA analyst John Kilduff asked.

Oil prices have been volatile the last couple of weeks, gaining nearly US$5 a barrel after Iran detained 15 British sailors and marines, dropping on their release last Thursday, and then sliding almost US$3 on Monday on expectations of oversupply at a key North American delivery point before slowly recovering somewhat.
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